Engineering network transformation: getting telcos ready to face the 21st century

Network transformation is anything but straightforward. System complexities across the networking domain are increasing due to virtualisation, integration with third parties and open source.

Guest author

March 17, 2016

5 Min Read
Engineering network transformation: getting telcos ready to face the 21st century periodically invites expert third parties to share their views on the industry’s most pressing issues. In this post, Sukamal Banerjee, EVP of Engineering and R&D services at HCL Technologies, looks at the challenges and opportunities presented by the next wave of network transformation.

In an era of unprecedented changes driven by technology, the telecom industry today is at an inflection point. The smartphone and new innovative devices that take advantage of the smartphone ecosystem are changing everything. Gartner predicts there will be around 25 billion connected devices by 2020. 70-80 % of the world’s population is expected to own smartphones by 2020 and data usage per smartphone is expected to grow at a CAGR of 30%.  The number of embedded devices will explode with the increased adoption of IoT, requiring ubiquitous connectivity and leading to a paradigm shift in the telecom ecosystem. Network operators are evolving their offerings, they are evaluating new business models and at the same time the end-user is demanding a more personalised experience.

From a cost standpoint – user expectations and the intense competitive environment that defines the telecom industry today is leading to constant margin erosions and ever-increasing demand from the network. From a revenue standpoint – owing to the emergence of faster connection speeds enabling VoIP calls, ever increasing options around messaging; voice and messaging-centric strategies are dead and buried. With the device mesh proliferating and getting bigger day-by-day, telecom operators will also need to adopt new paradigms with respect to their infrastructure investments. Hence, the charter seems quite clear for the telecom industry, which spends $55 billion annually on R&D – transform before it’s too late!

Disruptive technologies – overhauling the networking landscape

Various disruptive technologies such as Software defined Networking (SDN), Network Function Virtualization (NFV), 5G and Cloud-based services present telecom OEM and service providers the ability to offer users what they demand and even more. These technologies, which have the potential to completely overhaul the current networking landscape, are drawing investments worth billions of dollars today. According to recent research, the SDN/NFV market alone is expected to be worth more than $45 billion by 2020, with a staggering CAGR of 86.1% from 2015-2020. More than 90% of CIOs and CTOs of leading telecom operators classify NFV as their major focus area for implementation within the next three years.

Enough of the hype, so how does one monetise?

Evolving Cloud RAN architecture, where the hardware and software is being decoupled, will have profound implications on the future cost structure of wireless networks. Consolidation of network hardware equipment through NFV is leading to a reduction in capital expenditure and as the majority of the network becomes software controlled – it will be much easier to deploy and maintain, leading to reduced operational expenditures.  Cost. Check. What about revenue? SDN makes use of a centralised software-based controller, which helps in programming various network components. This enables more flexibility for the service provider, leading to faster deployment cycles and the ability to provide new services such as “bandwidth on demand,” resulting into increased revenue for the service providers.

However, network transformation can enable much more value when coupled with leverage of the evolution of IoT. One of the biggest challenges that IoT brings is managing the humungous amount of data traffic, leading to additional data centre investments and load on the network. With a programmable network, data centre investments for IoT, such as additional switches can be rationalised. Also, the extremely agile programmable network can dynamically provision bandwidth and balance spikes in IoT-related network loads. It’s clear that the time is right to think 21st Century and get set to transform to the software defined future.

Challenges loom large – taming the complexities

Network transformation is anything but straightforward. System complexities across the networking domain are increasing due to virtualisation, integration with third parties and open source. The complex ecosystem is further plagued by complicated relationships between operators, manufacturers and other technology partners for very natural commercial interests. Ensuring portability and interoperability, managing a hybrid environment, multi-vendor system integration, automation, security and stability are some of the critical challenges that operators are facing. The maturity period for services and offerings has gone down considerably, leading to the need for constant technological upgradation.

Enterprises will need to be agile while innovating constantly and look for new means to meet the increasing demands placed upon them by customers and investors more efficiently and effectively. To ensure accelerated rollouts, Technology Service Providers (TSPs) will need to redefine the scope of core vs context while choosing the right engineering partners to support the surge in demand for operations support, unified communications, customised solutions, validation and cloud enablement. According to a recent study by ISG, operators today are increasingly partnering with engineering service providers (ESPs) who have strong capabilities and are making significant investments in this space. ESPs are enabling the operators with a cost-effective network transformation, while monetising new revenue streams at the same time.

Network to transform the networks

Technology has always played the pivotal role as a disruptive force in reshaping industry boundaries and redefining business strategies, leading to new revenue models and eroding the traditional profit formulas. There is a huge growth opportunity provided we deal with this transformation aggressively, collaboratively and boldly. It’s time for software to start eating up the Networking world!


Sukamal-Banerjee-150x150.jpgSukamal Banerjee is the Global Head of Engineering Services (ERS) business line at HCL Technologies focused on Hi-Tech & Communications Markets. This involves defining market strategy, business development and P&L responsibility. In addition, he leads HCL ERS’ investments in Product Management and Service Line Unit development for world-wide markets. He also holds the global charter for extending HCL’s thought and implementation leadership in Internet of Things (IoT) and defining partnership strategy.

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